feedback
Charalambos Psimolophitis

When Regulation Matters

I was interested to hear, but cannot confirm, that HSBC recently hired its 10,000th compliance person at the global bank. Not an insignificant figure and roughly 5% of their workforce. Now whether it is true or not is a moot point as it doesn’t detract from the fact that compliance departments across the finance sector are ballooning and it’s an area that is only likely to continue to grow. The numerous probes that have rocked the financial sector recently have not made good headlines, there’s the banking scandal, Libor scandal, the pay day lending scandal, financial advice scandal and whilst they are all very different and cannot be placed under the same umbrella, to the average person they are all seen as something to do with finance and fall into the same category. Even the FX probe which has been ongoing for over a year now, but has only scratched the surface, will have a negative impact on the image of financial services as a whole. So regulation matters and it’s the job of compliance to not only help prevent financial misconduct, but promote and protect responsible business practices in the financial services industry.

As a retail broker that provides clients with an incredibly deep pool of FX liquidity, acting as the riskless principle for all the trades, we not only need to be strictly compliant in providing our services to our end users, but we rely on our institutional partners maintaining commercial liquidity flows into our systems so that our clients benefit from the tightest spreads possible. It is not only our aim to provide our clients, whether they are retail or institutional, with the best service possible, but to abide by the rules set out by regulators in order to afford the best possible protection and work with them to promote best practice. The most recent consultation being undertaken by the FCA in respect of how regulated firms use social media is a very welcome step towards ensuring we are promoting our products and services responsibly. Whilst some social media vehicles restrict what you can do, for example the character limitations on Twitter, firms have to adapt to ensure they are being compliant. A “tweet” or post on in most circumstances will be viewed as a financial promotion and therefore must be treated as such with the relevant warnings and disclaimers, regardless of what character limitations there might be.

FxPro is authorised and regulated in both the UK and Cyprus by the respective financial services regulatory bodies so when it comes to using social media we have to ensure we are abiding by two sets of rules. This dual regulation also helps to provide our clients comfort in the knowledge that they are dealing with a reputable firm that looks to promote its products and services within the parameters allowed. On top of this, and arguably the most important point for retail customers, is that their funds are safe and looked after in accordance with the rules set by the regulators. For some time now it has been not only a regulatory requirement for firms to segregate retail client funds from their own, but a legal one too, so in accordance with the rules we do not use retail client funds to fund any of our own operations. These funds are deposited with credit institutions (i.e. investment grade banks) and we are obliged to undertake periodic reviews of these institutions to validate their safety. The most recent example of FxPro acting upon this obligation was well before the Cyprus bail-in in 2013 when we moved all company and client accounts abroad. These funds are now parked in household names such as RBS, Barclays and Credit Suisse.

So regulation matters when it comes to protecting our customers and is something that FxPro takes very seriously.

5/5(2)